By Karen Hosler
Has Gov. Martin O’Malley’s broad array of tax increase proposals got you bummed out? Cheer up, there’s a bright spot.
If O’Malley succeeds in his plan to impose Maryland’s 6 percent sales tax on the purchase of gasoline, he will not only boost revenues for long overdue highway, bridge and mass transit projects, but possibly help clean the Chesapeake Bay at the same time, a formula that could work not just in Maryland, but in all of the Bay states.
Here’s how it works: Up to one-third of the nitrogen that pollutes the bay and its rivers comes from the air, and much of that comes from motor vehicle emissions. Thus, to the extent that Marylanders find the higher gas tax so burdensome that they drive less or trade up to more fuel-efficient vehicles, the bay gets a little breathing space.
Cheap energy is a curse to the environment. So, driving up the cost of gasoline is an effective countermeasure.
Now, there are caveats: If gasoline tax revenue comes in lower than expected, there may not be enough to invest to in mass transit projects, which also serve the bay. If drivers seeking fuel efficiency switch to electric cars, that may not help much either. Electricity comes mostly from coal, which adds mightily to air and water pollution.
Nonetheless, the concept of raising the federal gasoline tax as an environmental tactic has won broad support from prominent economists in both political parties over the last two decades. As an early warrior against global warming, Massachusetts Sen. John F. Kerry was famously in favor of a 50-cent per gallon federal gasoline tax increase — before he was against it as a presidential candidate.
Yes, the political challenge is not for the timid. But raising the gasoline tax has many potential benefits beyond the extra money and perhaps cleaner air it
Chief among those benefits is that a higher tax makes drivers pay more of the true cost of their burden on society.
“A gas tax is an indirect way of making people pay when their massive vehicles impose risk on others, which in turn makes them take account of this risk when choosing whether to buy some monster urban-assault vehicle or go with a sensible compact.” That was Harvard Economics Professor N. Gregory Mankiw writing on behalf of a 50-cent per gallon gas hike back in 1999 before he served as chairman of the Council of Economic Advisers to President George W. Bush.
Raising the gasoline tax is cheaper and more efficient than tightening federal fuel efficiency standards on vehicles as a means to fight global warming and reduce U.S. dependence on foreign oil, according to the Congressional Budget Office.
“Furthermore, an increase in the gasoline tax would reduce driving, leading to less traffic congestion and fewer accidents,” said the CBO in a March 9, 2004, report.
During those years when a federal gas tax increase was being considered, proponents of what a New York Times headline dubbed the “50-cent-a-gallon solution,” typically proposed to balance the wallop at the pump with a break on income or other taxes.
Gov. O’Malley is proposing the opposite: He wants to raise income and other taxes, too. On gasoline, he’s only asking 6 percent a gallon, levied at the wholesale level and thus not immediately visible at the pump.. At today’s prices, that would be about 18 cents per gallon phased in over three years. But that sales tax would be added to the state’s existing 23.5 cent per gallon excise tax for a total of 41.5 cents per gallon. And don’t forget that the feds are still collecting their 18.4 cents per gallon.
Fifty cents a gallon doesn’t sound so bad now, does it?
Maryland’s gasoline tax ranks in the middle of the 50 states, and is in sync with bay watershed neighbors Delaware and Washington, D. C. But O’Malley’s proposal would quickly leave Pennsylvania’s relatively high gas tax rate of 32.3 cents per gallon in the dust. Plus, there’s the danger that low-tax Virginia — at 17.5 cents a gallon — would encourage folks to gas up on its side of the border.
Even so, the entire watershed would benefit if Maryland, the most densely populated bay state, starts paying for its excesses. Maybe others would feel politically safe to follow Maryland’s example.
Of course, Maryland’s General Assembly will try to pare back the governor’s tax proposals. Neither Democrats nor Republicans want to go home and try to explain why they are picking the pockets of people already suffering through a long, painful recession.
In the case of the gasoline tax, though, something really good could come out of it, something you couldn’t actually pay people to do: Take better care of the environment and the Chesapeake Bay.
Karen Hosler, former editorial writer for the Baltimore Sun, is a reporter, commentator and talk show host in Baltimore. Distributed by the Bay Journal News Service.